A Quote by Benjamin Graham

It's nonsensical to derive a price/earnings ratio by dividing the known current price by unknown future earnings.

Benjamin Graham

Quote Topics

Current Derive Dividing Earnings Future Known Nonsensical Price Ratio Unknown Unknown Future

Quote Author

Benjamin Graham
American - Economist
May 8, 1894 - September 21, 1976

Calculate a stock's price/earnings ratio yourself, using Graham's formula of current price divided by average earnings over the past three years.

Benjamin Graham

If you can follow only one bit of data, follow the earnings - assuming the company in question has earnings. I subscribe to the crusty notion that sooner or later earnings make or break an investment in equities. What the stock price does today, tomorrow, or next week is only a distraction.

Peter Lynch

To know whether stocks are cheap or pricey, we typically look at price-to-earnings ratio. Valuation is a tougher question than many folks realize.

Barry Ritholtz

Of all the big Internet companies, Yahoo is the most highly valued on a price-earnings and price-sales basis.

Alex Berenson

What we do is we test what works on Wall Street. And sometimes it is earnings momentum, and sometimes it's earnings surprises. Sometimes it's price-to-sales cash flow, and then we put together our stock selection models.

Louis Navellier

Of course, the discounting of future earnings should hurt all stocks. But it should hurt technology stocks more than others, because so many of them are valued at extremely high levels relative to their current earnings.

Alex Berenson

I buy stocks when they are battered. I am strict with my discipline. I always buy stocks with low price-earnings ratios, low price-to-book value ratios and higher-than-average yield. Academic studies have shown that a strategy of buying out-of-favor stocks with low P/E, price-to-book and price-to-cash flow ratios outperforms the market pretty consistently over long periods of time.

David Dreman

People forget that although we can pinpoint the price, we can only guess at future earnings. The past isn't much help: It simply tells whether a market was pricey or cheap.

Barry Ritholtz

Clearly the price considered most likely by the market is the true current price: if the market judged otherwise, it would quote not this price, but another price higher or lower.

Louis Bachelier

Are you going to divest in the banks and pension funds? Plenty of people are willing to invest in stock of those companies. You can argue that when a lot of people divest, it makes the stock price artificially low, which makes their price-to-earnings ratio more favorable, which makes it a better investment for the people who don't give a damn - - and is it really going to change corporate behavior? It begins to create a climate of antagonistic opinion, the result might be that the corporate executives will retreat even more into their own selfjustifying narratives.

Charles Eisenstein

Approaches to determining stock values vary, but fundamentally, each company judging itself undervalued is saying that its future stream of earnings justifies a higher price than the stock market is willing to accord it.

Carol Loomis

Traders can cause short-term volatility. In the long run, the market must revert to a sensible price/earnings multiple.

Ben Stein

The only way an established enterprise can dramatically increase its stock price is by adding a net new high-growth earnings engine to its existing portfolio.